State employee Yvonee Walker demonstrates against Gov. Arnold Schwarzenegger next to George Bradshaw, of the River City Republican Party, in Sacramento, May 3, 2005. After being swept into office in the 2003 recall election, Schwarzenegger is now trying to convince an increasingly skeptical electorate that a 2005 special election is the only way he can bring true reform to the state. (AP/Rich Pedroncelli)

Unless there's a Supreme Court nomination fight, the big political story of the next few months will play out in California -- and what starts there often comes to the rest of the country. This week, frustrated by his legislature's failure to enact three key and controversial initiatives, Governor Arnold Schwarzenegger ordered a special election in November to let the people decide.

That's what Arnold Schwarzenegger asked of California voters in 2003, and they did. They recalled their governor and installed the political neophyte, believing his political inexperience to be a virtue.

California was drowning in red ink. High taxes and tripled car fees angered voters and did little to alleviate the staggering budget deficit. Schwarzenegger promised that he was willing to make tough decisions to fix what was broken. He enjoyed a 65 percent approval rating, and he set out his agenda. And for the first year it worked. Unemployment was down, personal income up, taxable sales up, and state exports increased after falling for the previous three years. Then interest groups, teachers, school groups, nurses, public sector unions and public safety organizations began to rally against him, concerned that his budget cuts would reduce spending on health care, police and fire departments and schools.

Today, just six months later, his most recent approval rating has fallen from 65 percent to 40 percent, his lowest since taking office. Now Schwarzenegger wants to go around the legislature to let the people decide.

"With the people's help there will be reform. Our broken state government will be modernized and revitalized."

Schwarzenegger is asking voters to approve three initiatives that would impose spending restraints on the state budget and give him the power to: cut programs if the budget falls out of balance; increase the number of years before public school teachers achieve tenure; and strip the legislature of the right to redraw their own voting districts, giving the authority to a panel of judges.

Schwarzenegger's call for a special election is risky. First, because he cannot control other measures that might qualify for the same ballot. One already has, a bill to require parental notification before performing an abortion on a minor. It threatens to overshadow Schwarzenegger's priority. And second, it's risky because a public rebuke of his initiatives could inflict a mortal wound on his re-election prospects next year and his future political ambition.

"I promise the people of California that I will fix a broken system. This is what this is all about."

Joining the panel is John Fund, who has covered California politics and writes for OpinionJournal.com.

"In my experience, politicians are risk-adverse. They prefer compromise. Why is Arnold Schwarzenegger taking this risk to go to the people in referenda?"

"Arnold is really doing what he said he was going to do, which is 'I am going to try and negotiate with the legislature, and if we can't get anywhere. I am going to take the issues to the people.'"

"I think a point we ought to make here is, this isn't just one guy. It isn't just Arnold Schwarzenegger against all of these forces. The private sector in California has been upset for years about the burden of regulation, cost and taxes that the legislature imposes on them, which retards job formation in California."

"If you see yourself as an action hero who promised change for California, you have to deliver it. The legislature is dominated by a special interest called the Public Employee Unions. They have decided to challenge Schwarzenegger on his fundamental reforms. He's going to go use the initiative process, the same type of direct democracy that elected him in the recall election, and ask the people: choose between the public employee unions or me."